GBP/USD Tests Resistance At 1.3635

British Pound Gains Ground Against U.S. Dollar

GBP/USD is currently trying to settle back above the resistance at 1.3635 while U.S. dollar is losing some ground against a broad basket of currencies.

The U.S. Dollar Index failed to get to the test of the support at 95.40 and rebounded towards the 50 EMA at 95.55. A move above this level will push the U.S. Dollar Index towards the 20 EMA at 95.70 which will be bearish for GBP/USD.

Today, foreign exchange market traders will focus on the economic data from U.S. Analysts expect that Initial Jobless Claims report will indicate that 220,000 Americans filed for unemployment benefits in a week. Continuing Jobless Claims are expected to increase from 1.56 million to 1.58 million. Existing Home Sales are projected to decline by 2% month-over-month in December.

Traders will also keep an eye on the developments in U.S. government bond markets. Treasury yields have settled near recent highs, and a continuation of the upside move may provide additional support to the American currency.

Technical Analysis

GBP/USD is testing the resistance level at 1.3635. RSI is in the moderate territory, and there is plenty of room to gain additional upside momentum in case the right catalysts emerge.

If GBP/USD manages to settle above 1.3635, it will head towards the next resistance level at 1.3665. A successful test of this level will push GBP/USD towards the resistance at 1.3700. If GBP/USD gets above 1.3700, it will head towards the next resistance at 1.3735.

On the support side, the previous resistance at 1.3600 will serve as the first support level for GBP/USD. In case GBP/USD moves below 1.3600, it will head towards the support at the 20 EMA at 1.3580.

A successful test of the support at the 20 EMA will open the way to the test of the next support level at 1.3535. If GBP/USD manages to settle below this level, it will head towards the next support level which is located at the 50 EMA at 1.3505.

For a look at all of today’s economic events, check out our economic calendar.